Teji Mandi: Three things investors should know on December 17, 2020
Teji Mandi: Three things investors should know on December 17, 2020
Teji Mandi

Price hike after a long lean period:

Automakers have started to report steady growth in demand post-September. This has prompted them to hike prices.

The players across the cars, two-wheelers, SUVs, and commercial vehicles have announced a price hike in the range of 1-5%, effective from January. Maruti Suzuki, HeroMoto, M&M, and Kia Motors have already notified the market about this.

Rising commodity prices could be the major reason behind the price hike. The prices of steel, aluminium, copper, lead, and rubber have inched up higher in the past month, putting pressure on margins.

Auto players have worked with depressed margins through the lean period over the last couple of years. But with rising demand and increased commodity prices offers them perfect reasons to hike prices.

Export subsidy for Sugar exporters:

The cabinet has approved a subsidy of Rs 3,500 crore for sugar exporters for the second consecutive year.

The cabinet has decided to help farmers by depositing subsidy directly into their accounts. The subsidy will be given on 60 lakh tonnes of sugar exports at the rate of Rs 6000 per tonne. Union Minister Prakash Javadekar informed.

The sugar industry continues to face a crisis due to excess sugar production. In the current season, domestic production is at 310 lakh tonnes as against the annual demand of 260 lakh tonnes.

The excess production over the years has created a pile of buffer stock. It is getting difficult to dispose of. Increasing export is difficult as the market is being filled with competition. Here, the subsidy comes into the picture.

The subsidy will help to cover a part of the cost, reducing production cost in the process. With that, the exporters will be able to quote a lower price for their commodity in the international market.

Spectrum Auction without 5G:

Union Cabinet has approved the auction of 2,251 megahertz of the spectrum by the end of FY2020-21. The government will auction the spectrum in the 700, 800, 900, 1800, 2100, 2300, and 2500 Mhz bands. The auction is being expected to be carried out in March. The last auction was being held four years ago.

In the Union Budget of 2020-21, the government had targeted a revenue of Rs 1.33 lakh crore from telecommunication services. It included spectrum auction proceeds, licensing fees, and other receipts. In 2019-20, the center had received Rs 58,990 crore in telecommunication revenues, versus a budgeted target of Rs 50,520.

The government has kept 3,300 MHz to 3,600 MHz bands – or the 5G spectrum bands – out of the process. Considering that major telecom players are bound to invest more in 5G technology, the announced auction may not excite them as much.

The auction is still critical for players from the point of view of strengthening their network capacity. It will also be a chance for new players to foray into telecom services.

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